A mobile phone giant has been explaining why it is charging customers over a "loyalty discount".

The issue at O2, which has thousands of customers in the West Midlands, has been raised by MoneySavingExpert .

It revealed several O2 customers who have seen charges of between £3 and £13 included - on the face of it because they were loyal.

However, O2 explained to one customer that the extra charge was - in fact - a result of their loyalty discount being out of contract.

Steve Nowottny, news and features editor at MoneySavingExpert, said: "We often warn when it comes to mobile phones, loyalty really doesn't pay - but it's pretty unusual to see an extra charge for loyalty in black and white on customers' bills.

(Image: Getty)

The Mirror reports the company told one customer : "This usually happens at the end of the contract when your loyalty discount ends.

"As you're billed a month in advance, we automatically debit what you've had credited in advance."

O2 told MoneySavingExpert it will write to affected customers to say sorry for any confusion - as well as extending their loyalty discounts for another 12 months for people staying on the same tariff as a gesture of goodwill.

"This is clearly an embarrassing billing blunder, although O2 have at least taken action to make it up to customers. But the wider message for anyone who's outside their mobile phone contract's minimum term is to check now if they can switch and save," Nowottny said.

"The best deals are usually for newbies, and moving to a cheap Sim-only deal can save many £100s each year."